Jason Griessel
Head of Cushman & Wakefield | BROLL Strategic Risk Services,
The construction industry is a powerhouse, reshaping skylines and revitalising communities. But beneath the scaffolding, a growing threat is emerging.
In recent years, tragedies like the George building collapse in South Africa, the L’Aquila earthquake in Italy, the devastating earthquakes in Haiti and Christchurch, New Zealand, and the horrific Grenfell Tower fire in the UK have exacted a staggering toll: over 200,000 lives lost, nearly $70 billion in damages. These disasters were more than accidents – they resulted from overlooked risks and a failure to prepare for the worst.
The construction industry isn’t alone in its vulnerability. The oil, gas and extractives sectors have long understood that loss of life impacts share value. It’s only a matter of time before South Africa’s construction companies are held to the same standard, and some are already due to reputational impacts.
Insurers, who play an integral part in the construction ecosystem, are growing wary of unchecked threats. They’re pushing for better risk management and targeted regulation enforcement. And they’re not alone. As 50- and 100-year weather events become the new norm, the entire sector must adapt with novel approaches to the construction of assets to withstand these types of severe weather conditions and environments.
Risk is a part of life, something we all intuitively assess daily. From the moment we roll out of bed and decide if we’re well enough to face the day, we constantly weigh threats and vulnerabilities. Yet this intuition is often abandoned in construction, where the stakes are highest. The way many in construction approach risk is broken, and the cost of inaction could be catastrophic.
Threats, vulnerabilities and risks
A threat is anything with the potential to cause harm. Vulnerability is our susceptibility to that harm. Risk is the intersection and outcome of the two – the resulting damage and picking up the pieces afterwards.
Risk is often used as a catch-all phrase. But in construction, a game lodge and an office building face different types of threats while ultimately being the same underlying asset—property. Marauding elephants may be a risk for the former, but not the latter. Nuance matters.
Real Estate investors and speculators understand this. They conduct rigorous risk assessments for every deal, knowing they won’t survive without them. But this mindset often doesn’t extend to the actual building process. Many in the construction industry consider risk assessments a burden, a grudge purchase. Worse, they leave our biggest assets to the lowest-paid workers with the least training. This must change.
Risk management
At Cushman & Wakefield | BROLL, we use models and International Standards for risk management. We have designed an accessible, affordable, and comprehensive framework into deployable commercial frameworks that increase the likelihood of organisations achieving objectives, identifying opportunities and threats, and effectively allocating resources to deter catastrophes or manage them better. This model can be used by any organisation, regardless of size or sector.
Successful organisations and entities operating in challenging environments all deploy risk engineering. It’s about using the least cost to achieve the most significant benefit. No one wants to spend R50 to save R1, but it’s worth spending R100 to save R1,000,000. This principle is at the heart of smart risk management.
Exposure analysis further assesses risk, using environmental and historical data to anticipate potential disasters. In an age of big data, there’s never been more information available to learn from past mistakes and make informed decisions.
Preparedness is about proactive measures to prevent hazards and prepare for the worst. For example, just as you would expect from a completed building, a construction site should be prepared by having space for evacuation and responders. On the other hand, it’s not about having an emergency response plan gathering dust. You’re not prepared if you don’t know who your crisis team is and can’t gather them in 10 minutes. If your plan isn’t integrated with your insurance, you’re leaving yourself exposed and potentially ignoring various tools to support you via expertise or service provision.
Response plans must be swift, coherent, and considerate. They must also communicate with those impacted and partners like insurers and vendors. Noncompliance is a ticking time bomb.
The trajectory of construction’s approach to risk is unsustainable. If things don’t change, insurance costs will skyrocket, making development prohibitively expensive. This will stall projects and prevent much-needed construction. The community will suffer, as will the industry itself.
The status quo isn’t an option anymore. The entire construction industry must get serious about risk now.
What more can we do to ensure safer construction?
Insisting on well-trained workers and artisans reduces construction risk. Embracing new, safer technologies, materials and equipment, where training and education are part of their use, can also make sites safer.
Then, building management systems in the design and construction of buildings, particularly for air quality control, Heating, Ventilation, Air Conditioning – HVAC, and fire, should be a prerequisite and certified. HVAC and its ongoing importance in ensuring building integrity, occupant health and safety cannot be overstated. With the advent of significant environmental events, which have culminated in rising damp in the built environment across Southern Africa, I foresee dramatic changes in compliance with these systems and their impacts in the near future.